Ravi went out shopping on a Saturday afternoon. He went to a store and bought himself formal clothes. He swiped his credit card and the payment was done in a flash. Then he went to a restaurant and enjoyed a delicious meal and proceeded to the multiplex to watch a movie. At both these places he swiped his credit card and the payment was done very conveniently in a few minutes. Later that night he did some shopping on an ecommerce site and made the payment via his credit card which was again hassle free.
Credit cards have changed the way people shop. It is one of the most secure and convenient ways of completing financial transactions and it removes the need to carry physical cash and notes. We have covered credit cards in detail in one of our earlier articles. Let us look at 10 reasons why you should use a credit card from your very first job or even earlier if possible!
1. Easy access to credit
The biggest benefit of using a credit card is easy access to credit. Sometimes you are in need of immediate funds as you have to pay a few expenses which are due. Credit cards are very useful in such situations as you can pay the expense now and pay the credit card bill later. It provides great utility when you are away from your salary day and you have to pay immediately for expense which cannot be postponed until your next salary.
2. Build credit history
By using a credit card responsibly, a person can build a credit history and a strong credit profile. This only improves the chances of getting loans in the future. Every activity done on the credit card is reported to the credit bureaus and it eventually becomes a part of your credit history. In the absence of credit history, it is always difficult to get a loan as no bank will be ready to approve you a loan or card.
3. Purchases and expenses can be spread over EMI’s
This is one of the best features of credit cards. Suppose you want to buy an air conditioner on credit card and it costs Rs 48,000. You can convert the purchase into equated monthly instalments (EMI’s) over a period of time like 12 months, 24 months etc. Suppose you convert it to a 12 month EMI, then you would pay Rs 4,000 monthly in your credit card bill for a period of 12 months. Paying via credit card EMI’s is a better option than taking a personal loan.
4. Widely accepted payment method
Credit card is one of the most accepted payment methods in India and the world. You need to carry very little cash if you have a credit card. Nearly all expenses can be paid using a credit card in the current times.
5. Travel and foreign currency transactions
Credit cards offer complementary lounge access at airports and railway stations in India. Also carrying credit cards during international travel removes the hassle of carrying foreign currency notes. Credit cards are widely accepted worldwide and are the most convenient way of completing transactions even though the issuing bank may charge a higher interest rate.
6. Cash withdrawal
These days credit cards also allow the card holder to withdraw cash from an ATM upto a certain limit. However, card holders should make use of this facility only in emergency situations. Most of the issuing banks levy charges for ATM withdrawals by credit card.
7. Flexible free credit period
All credit cards offer a free credit period of 45 – 60 days from the purchase date. This means you can use the credit card for payments during that period and no interest will be charged. It is advisable to pay the outstanding amount in full once the period is over and the amount becomes due to avoid interest charges, late payment penalties etc.
8. Discounts & Cashbacks
Credit cards have tie-ups with ecommerce sites, stores, brands and offer discounts and cashbacks on transactions you do with them. During festival season sales on ecommerce sites many credit cards offer cashback and large discounts. Credit cards also extend offers and discounts to dining outlets, multiplexes, food delivery apps etc. You can also enjoy fuel surcharge waiver at petrol pump outlets across the country if you pay via credit cards.
9. Reward Points
Credit cards come with reward points for every spend. The reward points can be redeemed to avail vouchers, merchandise, subscriptions and other exciting products. A lot of utility products can be availed using the reward points. These reward points have an expiry so the cardholder should keep a watch on the reward points balance and the expiry date.
10. Tracking expense
Using credit cards for all expense is a fantastic way for tracking monthly expenditure, then reducing unwanted expense and planning spends over a period of time. The cardholder can review the monthly credit card statement to track expense and analyze the spends.
Image credit: Image by Freepik
